Flats making a comeback

Rungs of property ladder ‘moved further apart during pandemic’, reports Vicky Shaw

Demand for flats outside London is at its strongest level for at least five years, according to a property website.

Relatively modest increases in flat prices compared with other property types are helping to drive interest from buyers across the UK, Zoopla suggested.

The average price for a terraced, semi-detached or detached home is £289,500, which is 8.8% higher than a year earlier, according to Zoopla’s figures.

The annual rise in flat prices is a quarter of the rate of increase for houses, with flat prices increasing by 2.2%.

The average price of a flat is now £175,700, Zoopla said.

It continued: “As hybrid working continues to become the norm and city workers slowly return to offices, demand for flats is on a sharp upward trajectory, reaching its highest level for five years.”

Zoopla’s records on demand started five years ago.

The website added: “Many agents are reporting that relatively modest price increases have helped reignite their popularity amongst buyers.”

Nick Leeming, chairman at estate agent Jackson-Stops said: “Demand hasn’ t only been limited to those seeking more space in rural locations.

“Demand is also rising across our cities as people once again return to offices and seek out cultural and social amenities including access to theatres, restaurants and museums.

“In London we have noted an uptick in homeowners who moved out to the countryside at the start of the pandemic, but who missed the city and have now returned.”

Tom Bill, head of UK residential research at Knight Frank said: “Apartments are… moving back onto the radar of buyers as lockdown restrictions are lifted, which has created a temporary sweet-spot of extremely high demand.”

And in related news, the average price of a detached home has increased by more than £60,000 during the coronavirus pandemic, analysis has found.

The typical price for a flat has increased by less than a quarter of this amount – £13,325 – according to Halifax.

Since March 2020, the average value of semi-detached houses has increased by £36,841 and the typical price for terraced properties has risen by £27,715.

The findings indicate how the rungs of the property ladder have moved further apart during the pandemic, making it more of a struggle for people trying to upsize into a bigger property.

Halifax estimates the UK’s flat owners can now expect to spend an extra £54,806 to upsize into a typical terraced house, compared with £40,416 in March 2020.

Those currently in a terraced property typically need a further £66,292 to own a semi-detached home, compared with £57,166 in March 2020.

And home-movers hoping to switch from a semi-detached to a detached house need an additional £145,087, which is nearly £24,000 more than the £121,371 typically required in March 2020.

Wales and the North West of England have seen the biggest percentage increases in detached home prices, up 24.4% and 21.9% respectively, Halifax said.

The analysis was based on data from the Halifax house price index and conducted in partnership with IHS Markit.

Russell Galley, managing director, Halifax, said: “Record numbers of moves have been taking place throughout the pandemic, with the demand for detached homes now greater than for any other property type, meaning the competition for those looking to buy an often larger property is fierce.

“As employers began to crystallise longer-term plans for home and hybrid working, buyers have been able to consider homes further afield as the need to commute falls away, with properties previously considered too remote now giving families extras like garden rooms and home offices.

“This trend means Wales, with its beautiful countryside and lower relative property prices, saw the strongest growth in detached homes over the past two years.”

Here is how the average prices of different UK property types have increased since March 2020, according to Halifax, with the percentage and cash increase and the average price by December 2021:

■ Flats: 9.1%, £13,325, £158,992 ■ Terraced: 14.9%, £27,715, £213,798

■ Semi-detached: 15.1%, £36,841, £280,090

■ Detached: 16.6%, £60,556, £425,177